Petrobras Finds Oil as CEO Sees ‘Fantastic Moment’

Petroleo Brasileiro SA found another deposit of oil and natural gas in Brazil’s Santos Basin as Chief Executive Officer Jose Sergio Gabrielli sought to reassure international investors about the company’s prospects.

The discovery was made together with BG Group Plc and Repsol YPF SA after a fourth well was drilled in the BM-S-9 block off the country’s southeastern coast, Petrobras, Brazil’s state-run oil company, said in a statement last night. The Abare Oeste field is neighbor to the Carioca, Guara and Iguacu fields, where the company has already reported the existence of crude.

Petrobras found the oil as Gabrielli met investors in New York to defend President Luiz Inacio Lula da Silva’s plan to increase control over the energy industry through regulations being debated in Congress. The rules would allow the government to boost its stake in Petrobras and make the company the sole operator of so-called pre-salt fields, which may more than double Brazil’s proven reserves in three years.

“We are in a fantastic moment,” Gabrielli, 59, said in an interview with Bloomberg Television yesterday in New York. Brazil has the world’s biggest potential reserves and the ability “to develop the whole supply chain to provide goods and services to the oil industry,” he said.

Petrobras rose 16 centavos, or 0.5 percent, to 33.40 reais in Sao Paulo trading. The shares have climbed 46 percent this year compared with a 58 percent gain for Brazil’s benchmark Bovespa stock index.

35 Billion Barrels

Petrobras’s proven oil reserves may more than double to as much as 35 billion barrels in the next two to three years from about 14 billion currently, Gabrielli said in the interview. Pre-salt deposits, below as much as 3,000 meters (9,840 feet) of water and 7,000 meters beneath the seabed, may hold as much as 80 billion barrels of oil and gas equivalent, regulators say.

The Rio de Janeiro-based company may have an initial estimate by early next year for the value of 5 billion barrels of reserves that the government plans to let Petrobras tap in exchange for shares, Gabrielli said.

Gabrielli responded to investors’ demands that the government be excluded from a vote on a planned sale of new stock, saying Brazilian law requires all shareholders to approve the proposal. The company will raise at least $25 billion through the offering, according to Itau Unibanco Holdings SA, Brazil’s largest non-state bank.

“There is no reason why the government should exclude itself,” Gabrielli said in the interview. “I don’t see why there may be a concern from the shareholders on whether the operation will be fair.”

Bigger Government Stake

Petrobras is working with Brazil’s oil agency to define where the 5 billion barrels of reserves will be located, Gabrielli said. The initial evaluation will be available to minority shareholders 30 to 45 days before the planned equity offering, he said.

The government, which holds 32 percent of Petrobras’s total equity and 56 percent of voting shares, may increase its stake because not all minority holders will take part in the offering, Gabrielli said.

“The conditions for exercising the preemptive rights are being guaranteed,” he said.

Gabrielli said he expects the legislation to be approved as early as February. He will meet investors and analysts in Paris Sept. 17 and in London Sept. 18 to explain the proposals.

‘Billions of Dollars’

Petrobras plans to invest $174.4 billion in the next five years to boost crude output by 53 percent. The company, the world’s ninth largest by market value, is spending billions to tap offshore oil deposits including the Tupi field, the largest discovery in the Americas since Mexico’s Cantarell in 1976.

“We have a very big decision-making process,” Gabrielli said in the interview. “We are talking about projects that are worth billions of dollars.”

Petrobras said Sept. 8 that the Guara field may hold as much as 2 billion barrels of oil and is estimated to yield 50,000 barrels daily when it begins to operate in 2012. The company also said in April that Iguacu contained “significant” resources, while declining to estimate its size.

Petrobras is the operator of the BM-S-9 block, with a 45 percent stake. Reading, U.K.-based BG has 30 percent and Repsol, with headquarters in Madrid, holds 25 percent.

Petrobras wants to increase output to about 3.66 million barrels a day by 2013, compared with 2.4 million barrels a day in 2008, the company has said.

BG rose 1.6 percent to 1,127 pence at 3:21 p.m. in London today, while Repsol added 1.5 percent to 18.24 euros.